Mergers and Acquisitions: Turmoil in Top Management Teams
Mergers and acquisitions can be tumultuous for executives. Target companies can expect to lose close to 40 percent of their top management team within two years after acquisition. Executives who stay often lose status and autonomy and view their company’s acquisition as detrimental to themselves both personally and professionally. It is common for acquiring firms to replace target executives with their own shortly after an acquisition. The evidence, however, shows clearly that doing so leads to lower target company performance. Why, then, are acquiring firms so quick to replace target company executives after an acquisition? This book provides executives with an in-depth look at the consequences of M&As for acquired top management teams. It examines M&As as a corporate growth strategy, the importance of top management teams to a firm’s long-term performance, the reasons why executives depart after an acquisition, and the effects of these departures on target company performance. It then discusses when executive turnover may be desirable or undesirable and how acquiring firms can more effectively manage target company executive teams during the integration process. An understanding of these leadership issues will play an important role in determining merger success.
Praise for Mergers and Acquisitions
“Several years ago, I moderated an executive forum on M&As at Forbes in New York. We examined a range of issues faced by executives as they engaged in M&As. Jeff served on a panel of executives that discussed the “soft side” of merger integration. At that time, Jeff was working with Walt Shill at Accenture to develop new insights on executive turnover and the negative impact that leadership instability has on merger effectiveness. This book presents new perceptions from Jeff’s years of research in the area. I highly recommend it to executives involved in the merger integration process.” —Neil Weinberg, Executive Editor, Forbes
"Jeff Krug and I may be considered fellow travelers. We have both long been interested in the top management turnover effects of M&As. However, any comparison stops right there. While I was interested in how such turnover might increase our understanding of corporate control practices, Jeff knew that it was about so much more. He knew that managing turnover is crucial to a firm’s ability to unlock value in corporate control changes. This book is a wonderful testament to his insight…and to his dogged determination to fully understand how top management team dynamics can either ensure a combination’s success or doom it to failure. Academics and executives alike will really appreciate his mastery of these issues." —James P. Walsh, Carey Professor of Management Ross School of Business, University of Michigan
"I approached Jeff a few years ago about his research on executive turnover in M&As after reading his article in Harvard Business Review. His research validated my experience with the tumultuous effects of M&As on top management teams. These I had witnessed while working with many clients over the years. We have since worked together to discover new insights into post-merger leadership issues. These efforts have helped Accenture support clients during merger integration work. I highly recommend this book to executives involved in M&As." —Walt Shill, Global Managing Director, Accenture LLC
“Dr. Krug is nationally recognized for his research on M&As and its effects on top management. His recent article on executive churn following M&As is one of the most popular papers recently published in the Journal of Business Strategy. This book expands on this topic and provides a practical framework to show acquiring firms how they can retain the most effective executives in both companies. Executives, consultants, and academics alike will find Dr. Krug's research valuable, readable, and insightful." —Nanci Healy, Editor, Journal of Business Strategy
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